Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”),^[1] and Rule 19b-4 thereunder,^[2] notice is hereby given that on July 30, 2026, The Options Clearing Corporation (“OCC” or “Corporation”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared primarily by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Clearing Agency's Statement of the Terms of Substance of the Proposed Rule Change

This proposed rule change would amend OCC's Rules to establish a procedures-based approach for determining product eligibility during overnight or extended trading sessions (“ETH”) ^[3] utilizing its current ETH risk management framework. Currently, the only products that OCC clears in ETH sessions are index options listed by Cboe Global Markets, Inc. (“Cboe”) and index futures listed by Cboe Futures Exchange, LLC (“CFE”). The proposed changes would create a framework for risk managing other products that an “Exchange” ^[4] may propose to trade outside of regular trading hours while maintaining the established risk management framework.^[5]

The proposed changes would allow OCC to accommodate requests from any participating Exchange, including CFE's request to trade options on index futures outside of regular trading hours and Cboe's proposal, which was approved by the Commission,^[6] to amend its Global Trading Hours to allow trading of multi-listed equity options.^[7] Other Exchanges subsequently filed similar changes to their rules.^[8] In addition, OCC has designed the changes to create a framework for evaluating other products that an Exchange may propose to be traded outside of regular trading hours in the future that can be effectively risk-managed within OCC's established frameworks and procedures. To the extent OCC determines that changes to its existing ETH procedures would be necessary to support a particular product trading at a particular time, the proposed change would provide that such changes would be made in accordance with (i) OCC's regulatory obligations ( e.g., filing obligations under Section 19 of the Exchange Act) and (ii) the Participant Exchange Agreement ^[9] between OCC and the national securities exchanges or OCC's agreement with a requesting futures market.^[10]

OCC filed the proposed changes to OCC's Rules and the Extended Trading Hours Set-Up and Monitoring Procedure as Exhibits 5A and 5B to File No. SR-OCC-2026-008, respectively. Material proposed to be added as currently in effect is underlined and material proposed to be deleted is marked in strikethrough text. All capitalized terms not defined herein have the same meaning as set forth in the OCC By-Laws and Rules.^[11]

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

OCC is a self-regulatory organization (“SRO”) that is registered as a covered clearing agency (“CCA”) under the Exchange Act, as amended, and a derivatives clearing organization (“DCO”) under the Commodity Exchange Act. OCC is also a derivatives clearing organization registered with the Commodity Futures Trading Commission (the “CFTC”) that clears futures products for CFE, and MIAX Futures Exchange, LLC (“MIAX”),^[12] both designated contract markets by the CFTC pursuant to Section 5 of the Commodity Exchange Act.^[13] In its role as a CCA and central counterparty (“CCP”), OCC is the guarantor for all contracts cleared through OCC, assuming the role of buyer to every seller and the seller to every buyer to ensure the prompt and accurate settlement of securities. In its capacity as a CCP, OCC is exposed to certain risks, including credit risk,^[14] because OCC is obligated to perform pursuant to its By-Laws and Rules even when one of its members defaults. OCC manages its credit risk through various safeguards to ensure that it has sufficient financial resources in the event of a Clearing Member failure. For example, OCC periodically collects ( printed page 53295) margin collateral from its Clearing Members, which is designed to cover the credit exposures they individually present to OCC with a high degree of confidence. OCC also maintains authority and has established procedures for collecting additional margin from Clearing Members on an intraday basis due to changes in positions ^[15] or changes in prices.^[16]

The clearance of trades that occur outside of regular trading hours presents OCC with certain additional considerations from a risk management perspective. First, OCC is limited in its ability to issue and collect intraday margin calls from a Clearing Member presenting increased risk to OCC. Second, trading outside of regular hours presents greater operational risk due to reduced Clearing Member operational and risk staff available to address issues that might arise during extended hours. Third, OCC has observed that for those products that currently trade ETH, the markets for such options typically have more limited market liquidity, which can lead to higher transaction costs for participants seeking to initiate or unwind positions during ETH sessions. These market dynamics carry risk management implications. Shallow market environments can manifest price gapping,^[17] where modest trades can lead to outsized market moves and can lead to changes in valuations of positions and thus, increases in margin requirements. Another consideration is the behavior of market makers, who may scale back quoting activity during extended trading hours due to wider uncertainty, lower volumes, and less capacity to hedge. If market maker participation decreases during extended trading hours, it could lead to episodic volatility and a degradation of price discovery.

OCC manages these risks for products that currently trade in ETH sessions through its ETH procedures. In 2015, OCC established its ETH procedures ^[18] for certain products proposed by Cboe and CFE to be traded outside of regular trading hours, including index options and index futures.^[19] The ETH procedures allow for the provision of clearing and settlement services to participant exchanges subject to compliance with OCC's risk management procedures and controls. As described in more detail below, these procedures were designed to reduce and mitigate the risks associated with clearing trades executed in ETH sessions, and included the following components and controls: (i) qualification criteria used to approve Clearing Members for ETH sessions, including ETH deposit requirements, (ii) systemic controls to identify trades executed during ETH sessions by Clearing Members not approved for such sessions, (iii) enhancements to OCC's overnight monitoring of trades submitted by Exchanges during ETH sessions, (iv) enhancements to OCC's credit controls with respect to monitoring Clearing Members' credit risk during ETH sessions, including procedures for contacting an Exchange offering ETH sessions in order to invoke use of the Exchange's kill switch, and (v) rule enforcement actions such as taking appropriate disciplinary action against Clearing Members who attempt to clear during ETH session without first obtaining requisite approvals.

These ETH procedures were also designed to work in conjunction with the risk controls of the Exchanges that offer ETH sessions. Such Exchange risk controls consist of: (1) price reasonability checks, (2) controls to prevent orders from being executed beyond a certain percentage (determined by the Exchange), (3) activity based protections which focus on risk beyond price, such as a high number of trades occurring in a set period of time, and (4) kill switch capabilities, which may be initiated by the Exchange and can cancel all open quotes or all orders of a particular participant.

While these procedures were designed to facilitate the clearing of index options and index futures, Exchanges, including CFE and Cboe, have requested that OCC expand its support for other products during the ETH sessions. First, CFE has requested that OCC provide clearance and settlement services for options on VIX futures (“VX Futures Options”) ^[20] during the same hours in which VIX futures currently trade. Second, Cboe, Nasdaq and NYSE have filed proposed changes to their Global Trading Hours for multi-listed equity options.^[21] Specifically, these proposals would establish an early morning session from 6:30 a.m. Central Time to 8:25 a.m. Central Time and an afternoon session from 3:00 p.m. Central Time to 3:15 p.m. Central Time for trading of multi-listed equity options. These proposals also limit the number of equity options classes that may be designed for its Global Trading Hours to 100 option classes and establish criteria for eligibility based on average daily options volume, market capitalization of the underlying equity, and average daily trading volume of the underlying equity. Cboe has stated these criteria will help ensure options designated for trading in its Global Trading Hours will have sufficient demand and liquidity to support a Global Trading Hours market.^[22]

OCC has evaluated these proposed changes to Exchange rules to determine whether OCC has the legal authority, operational capacity and risk management processes in place to support the clearance and settlement of such products during such hours. OCC evaluates each proposed product using criteria that include, among other things: (1) compatibility with OCC's existing margin methodology, (2) availability of real-time settlement pricing, and (3) consistency with OCC's operations risk management requirements.

OCC has determined to treat the proposed early morning session as extended trading hours, and to extend OCC's ETH procedures to that activity. OCC believes that extending the ETH procedures to the early morning trading session is prudent from a risk management perspective to address potential operational and market risk associated with trading in such early morning session. OCC's ETH procedures have operated without disruption through multiple periods of high volatility since 2015. The proposed products are not new to OCC, as single-name equity options and options on VX futures are already cleared by OCC during regular trading hours and margined using OCC's existing margin ( printed page 53296) methodology. Further, the Exchanges' proposed eligibility criteria would limit initial participation to the most liquid U.S. equity options, reducing the risk of outsized credit exposures to OCC during the early morning session. In addition, consistent with OCC's Rule 609,^[23] any credit risk accumulated during the early morning session is subject to OCC's start of business margin call at 8:30 a.m. CT, at which time settlement banks are open and OCC can collect any required additional margin deposit.

OCC's determination that its existing ETH procedures are adequate to manage the risks associated with the proposed extension of ETH rests not only on product compatibility, but also on the material enhancements and substantial build-out to its risk management processes and systems in the years since the ETH procedures were first implemented. For example, OCC has made enhancements to its proprietary margin methodology, the System for Theoretical Analysis and Numerical Simulations (“STANS”), including by, among other things:

(i) incorporating daily price and returns data of securities; ^[24]

(ii) incorporating variations in implied volatility; ^[25]

(iii) enhancing its models for generating theoretical values for listed options^[26] and the futures products that OCC clears;^[27]

(iv) establishing a risk-based liquidation charge to account for the costs of liquidating a defaulting Clearing Member's portfolio; ^[28]

(v) establishing procedures for adjusting certain parameters when the products OCC clears and the markets it serves experience high volatility; ^[29]

(vi) enhancing the models to better account for the risk of short-dated options; ^[30] and

(vii) implementing and enhancing backtesting procedures for monitoring the performance of the models and establishing a margin charge should OCC identify backtesting deficiencies at the Clearing Member level.^[31]

Further, OCC has made enhancements to its intraday risk monitoring and collection of margin resources to cover intraday risk, including by establishing an Intraday Risk Charge and thresholds for margin calls during regular trading hours, similar to the procedures for ETH established in 2014.^[32] Further enhancements to the intraday risk process have been designed and will be implemented upon migration to OCC's new clearance and settlement system, Ovation.^[33]

In addition, beginning in 2018, OCC also implemented a comprehensive stress testing methodology that it uses to size its Clearing Fund and call for additional resources if stressed exposures exceed certain thresholds, to ensure that OCC maintains sufficient financial resources to cover the loss of the two Clearing Member groups presenting the largest stressed exposures to OCC in extreme but plausible market conditions.^[34] OCC has also diversified its access to liquidity through the addition of new liquidity facilities and liquidity providers to ensure OCC has sufficient qualifying liquid resources to meet liquidity demands in such stressed conditions,^[35] including liquidity demands arising from OCC's election under its accord with the National Securities Clearing Corporation (“NSCC”) to step into the shoes of a Clearing Member for whom NSCC has ceased to act in order to ensure the continued settlement of exercise and assignment activity for physically settled options through NSCC's CNS system.^[36] Taken together, OCC believes that these risk management enhancements help to ensure that OCC's existing ETH procedures are sufficient to support the expanded ETH sessions.^[37]

OCC has also determined that it may support the proposed afternoon session as regular trading hours, regardless of whether that trading session is classified as regular trading hours, a curb session, or some other designation under the rules of an Exchange. OCC believes treating such activity as within regular trading hours is consistent with the definition of ETH under its existing ETH procedures.

This proposed rule change would amend OCC's Rules to establish a legal framework governing OCC's authority to determine product eligibility and session hours for ETH clearing, and to accommodate Exchange proposals to expand the products and hours covered by its ETH procedures. Specifically, the proposed amendments would: (i) clarify that OCC determines what constitutes “regular trading hours” and “extended trading hours” for purposes of OCC's operations and risk management ( i.e., this determination is independent of how a particular Exchange may categorize such trading under its rules); ( printed page 53297) (ii) provide that contracts cleared during extended trading hours will be subject to OCC's established ETH procedures; (iii) provide that OCC will determine in its sole discretion, and for the protection of OCC, its Clearing Members and the general public, whether the risk of a product proposed by an Exchange to be traded in extended trading hours may be managed under OCC's existing ETH procedures; and (iv) provide that if OCC determines that an Exchange's proposal requires changes to its existing ETH procedures, such changes will be made in accordance with (a) OCC's regulatory obligations and (b) OCC's agreement with the Exchange. These changes are designed to both accommodate existing Exchange requests, as well as to serve as a foundation for evaluating future Exchange requests to trade products outside of regular trading hours, while ensuring that if OCC needs to make changes to its operations and risk management processes to accommodate such requests, such changes would remain consistent with OCC's regulatory obligations and agreements with the Exchanges. OCC does not intend this proposal to solve every issue raised by the industry's transition to 24/7 trading,^[38] nor does OCC believe those issues need to be resolved to support the trading hours under the current Exchange proposals. Rather, this proposed rule change is designed to support an incremental step towards a continuous trading environment and to provide a framework for future steps.

Existing ETH Procedures

OCC manages the risk associated with clearance and settlement of trades in ETH sessions through ETH procedures, approved by the Commission, that include (i) qualification criteria for Clearing Member participation, (ii) systemic controls to detect unauthorized trading by participants that have not qualified to trade in ETH sessions, (iii) overnight monitoring of Clearing Members' credit risk during ETH sessions, (iv) credit controls to address potential increased exposure during ETH sessions, and (v) rule enforcement should Clearing Members trade in ETH sessions without prior approval. Under the proposed rule changes discussed below, these procedures would apply to the clearance and settlement of trading in hours that OCC has determined are outside of regular trading hours.

Qualification Criteria

In order to mitigate risks associated with clearing for ETH sessions, Clearing Members that participate in such trading sessions are required to provide contact information to OCC for operational and risk personnel available to be contacted by OCC during such sessions. In addition, OCC requires that Clearing Members participating in an ETH session post additional margin in a designated account in order to mitigate against the risk that OCC cannot draft a Clearing Member's bank account during an ETH session.^[39] OCC has also adopted procedure whereby, on a quarterly basis, it confirms its record of Clearing Members eligible for ETH sessions with a similar record maintained by Exchanges offering such ETH sessions.

With respect to providing operational and risk contacts, under OCC Rule 201(b), each Clearing Member is required to maintain facilities for conducting business with OCC, and a representative of the Clearing Member authorized in the name of the Clearing Member to take all action necessary for conducting business with OCC is required to be available at the facility during such hours as may be specified from time-to-time by OCC. Similarly, OCC Rules 203(c) and (d) require Clearing Members to ensure that they have the appropriate number of qualified personnel and to maintain the ability to process anticipated volumes and values of transactions. OCC uses this existing authority to require Clearing Members trading during ETH sessions to maintain operational and risk staff that may be contacted by OCC during such sessions.

OCC charges Clearing Members qualified to participate in ETH sessions additional margin requirement in an amount of the lesser of $10 million or 10% of the Clearing Member's net capital (“ETH margin add-on”), which is equal to the first monitoring risk threshold (described below) and which would be collected as part of regular morning settlement. Clearing Members must identify the proprietary account that would be charged the ETH margin add-on amount. The ETH margin add-on requirement is intended to provide OCC with additional margin assets should a Clearing Member's credit risk increase during ETH sessions.^[40] Clearing Members that do not have sufficient excess margin on deposit with OCC to meet the ETH margin add-on amount are required to deposit additional funds with OCC to satisfy the ETH margin add-on requirement as part of regular morning settlement.^[41]

OCC Clearing Members wishing to participate in trading activity during ETH trading sessions must receive OCC's approval, before an Exchange would grant trading privileges for such sessions. OCC also confirms that an Exchange offering ETH trading sessions has implemented a procedure to periodically ( i.e., quarterly) validate its record of approved clearing firms against OCC's record of Clearing Members approved for ETH sessions. Any discrepancies between the two records would be promptly resolved by either the Clearing Member obtaining approval at OCC for ETH sessions, or by the Exchange revoking the clearing firm's trading privileges for ETH sessions.

Systemic Controls

OCC has implemented systemic controls so that trades submitted to OCC during ETH sessions that have been executed by Clearing Members not approved for such trading sessions would be reviewed by OCC staff after acceptance but before being processed (each such trade being a “Reviewed Trade”). OCC would contact the submitting Exchange regarding each Reviewed Trade in order to determine if the trade is a valid trade. If the Exchange determines that the Reviewed Trade was in error such that, as provided in Article VI, Section 7(c), a new or revised trade information is required to properly clear the transaction, OCC expects the Exchange would instruct OCC to disregard or “bust” the trade. If the Exchange determines that the Reviewed Trade was not in error, then OCC would clear the Reviewed Trade ^[42] and take appropriate ( printed page 53298) disciplinary action against the non-approved Clearing Member, as described below. OCC believes that clearing the Reviewed Trade is appropriate in order to avoid potentially harming the Clearing Member approved for ETH sessions that is on the opposite side of the transaction.

Overnight Monitoring

OCC has implemented additional overnight monitoring in order to better monitor Clearing Members' credit risk during ETH sessions. Such monitoring of credit risk is similar to existing OCC practices concerning futures cleared during overnight trading hours and includes automated processes within ENCORE to measure, by Clearing Member: (i) the aggregate mark-to-market amounts of a Clearing Member's positions, including positions created during overnight trading, based on current prices using OCC's Portfolio Revaluation system, (ii) the aggregate incremental margin produced by all positions resulting from transactions executed during overnight trading, and (iii) with respect to options cleared during ETH sessions, the aggregate net trade premium positions resulting from trades executed during ETH trading (each of these measures being a “Credit Risk Number”). Hourly credit reports are generated containing the Credit Risk Numbers expressed in terms of both dollars and, except for the mark-to-market position values, as a percentage of net capital for each Clearing Member trading during ETH sessions. The Credit Risk Numbers are the same information used by OCC staff to evaluate Clearing Member exposure during regular trading hours and, in addition to OCC's knowledge of its Clearing Members' businesses, are effective measures of the risk presented to OCC by each Clearing Member. OCC's Operations staff review such reports as they are generated and, in the event that any of the Credit Risk Numbers for positions established by a Clearing Member during an ETH session exceeds established thresholds, staff would alert OCC's Market Risk staff ^[43] of the exceedance in accordance with established procedures, as described below. Market Risk staff follow a standardized process concerning such exceedances, including escalation to OCC's management, if required by such process.

With respect to OCC's escalation thresholds, if any Credit Risk Number of a Clearing Member approved for ETH sessions is $10 million or more, or any Credit Risk Number equals 10% or more of the Clearing Member's net capital, an email is generated with a Level 1 Exceedance. This threshold functions as an early warning system, alerting Market Risk and Member Services to a developing credit risk situation before it reaches levels requiring more urgent intervention. At this tier, Operations staff notifies Market Risk and Member Services by email; Market Risk reviews the notification and assesses whether immediate action is warranted. More prescriptive remedial action is not required at this tier because the exposure level is covered by the pre-positioned ETH margin add-on, which OCC holds at the start of each ETH session. The higher thresholds require progressively more urgent action because they represent exposures that exceed that buffer.

If any Credit Risk Number of a Clearing Member approved for ETH sessions is $50 million or more, or equals 25% or more of the Clearing Member's net capital, Operations staff would be required to contact, by telephone and email: (i) Market Risk and Member Services, (ii) the applicable Exchange for secondary review, and (iii) the Clearing Member's designated contacts. The on-call Market Risk duty officer would also consider if additional action is necessary, which may include contacting a designated executive officer in order to issue an intra-day margin call pursuant to OCC Rule 609, increase the Clearing Member's margin requirement in order to prevent the withdrawal of a specified amount of excess margin collateral, if any, the Clearing Member has on deposit with OCC pursuant to OCC Rule 601, or contacting the Exchange in order to invoke use of its kill switch. A Rule 601 margin requirement increase and Rule 609 intraday margin call are tools that reflect the operational constraints for ETH trading during hours in which banks may not be open, such as overnight. If banks are not open, OCC would not be able to collect additional cash during the hours in which such trading was taking place. In that case, OCC Rule 601 serves as a real-time tool that takes effect immediately, preventing a Clearing Member from withdrawing excess collateral already on deposit with OCC, without requiring a cash transfer. When settlement banks reopen, Rule 609 enables OCC to collect additional funds where a Clearing Member's existing excess collateral is insufficient to cover the incremental risk incurred during ETH. OCC Rule 601 also allows OCC to reduce the amount it would need to draft for a Rule 609 margin call by the amount of excess collateral the Clearing Member has on deposit at OCC.

If any Credit Risk Number is $75 million or more, or equals 50% or more of the Clearing Member's net capital, Operations staff would be required to contact, by telephone and email, Market Risk staff, the on-call Market Risk duty officer and a designated executive officer. Such officer would be responsible for reviewing the circumstances and determining whether to implement credit controls, which are described in greater detail below and include: issuing an intra-day margin call, increasing a Clearing Member's margin requirement in order to prevent the withdrawal of a specified amount of excess margin collateral, if any, the Clearing Member has on deposit with OCC, whether further escalation is warranted in order for OCC to take protective measures pursuant to OCC Rule 305, or contact the Exchange in order to invoke use of its kill switch. OCC believes that these thresholds strike an appropriate balance between effective risk monitoring and operational efficiency.

Credit Controls

In order to address credit risk associated with trading during ETH sessions, and as described above, OCC collects the ETH margin add-on from Clearing Members and monitors and analyzes the impact that positions established during such sessions have on a Clearing Member's overall exposure. Should the need arise based on threshold breaches described above, and pursuant to OCC Rule 609, OCC may require the deposit of additional margin (“intra-day margin”) by any Clearing Member that increases its incremental risk as a result of trading activity during ETH sessions. Should a Clearing Member's exposure significantly increase, OCC has the authority under OCC Rule 601 to increase a Clearing Member's margin requirement which would restrict its ability to withdraw excess margin collateral.

Furthermore, if a Clearing Member's trading activity during ETH sessions causes its exposure to exceed OCC's intra-day margin call threshold, OCC would require the Clearing Member to deposit intra-day margin equal to the incremental risk presented by the Clearing Member. Specifically, if a Clearing Member has a current risk charge ^[44] exceeding 25% and a loss of ( printed page 53299) greater than $50,000 from an ETH session(s), OCC would initiate an intra-day margin call, subject to OCC's policies and procedures.^[45] The margin call amount would be calculated using positions and prices as of the most recent snapshot generated during the ETH session.^[46] Accordingly, OCC would know at approximately 8:30 a.m. (Central Time) if an intra-day margin call on a Clearing Member would be initiated based on breaches of this threshold.^[47] This “start of business” margin call is in addition to daily margin OCC collects from Clearing Members pursuant to OCC Rule 605, any intra-day margin call that OCC may initiate as a result of regular trading sessions or special margin call that OCC may initiate.

In addition to, or instead of, requiring additional intra-day margin, OCC Rule 601 ^[48] and OCC's Margin Policy work together to authorize Market Risk staff to increase a Clearing Member's margin requirement which may be in an amount equal to an intra-day margin call.^[49] Any increased margin requirement will remain in effect until the next business day. This action would immediately prevent Clearing Members from withdrawing any excess margin collateral (in the amount of the increased margin requirement) the Clearing Member has deposited with OCC. With respect to clearing trades executed in ETH sessions, and in the event OCC requires additional margin from a Clearing Member, Market Risk staff may use increased margin requirements as a means of collateralizing the increase in incremental risk a Clearing Member incurred during such sessions.^[50] Such action may be taken by OCC instead of or in addition to issuing an intra-day margin call depending on the amount of excess margin a Clearing Member has on deposit with OCC and the amount of the incremental risk presented by such Clearing Member. This intra-day margin call process as described in the preceding paragraph, including OCC's ability to manually increase Clearing Members' margin requirements, mitigates the risk that OCC is under-collateralized as a result of overnight trading hours.

Moreover, a designated executive officer may call an Exchange offering ETH sessions to invoke use of its kill switch. The kill switch would prevent a Clearing Member (or the market participant clearing through a Clearing Member) from executing trades on the Exchange during a given ETH session or, if needed, stop all trading during a given ETH session. Finally, pursuant to OCC Rule 307B, the Chief Executive Officer or the Chief Operating Officer of OCC, in certain circumstances, has the authority to impose limitations and restrictions on the transactions, positions and activities of a Clearing Member. This authority would be used, as needed, in the event a Clearing Member accumulates significant credit risk during ETH sessions, or a Clearing Member's activities during such trading sessions otherwise warrant OCC taking protective action.

Rule Enforcement Actions

In order to deter Clearing Members from attempting to participate in ETH sessions without authorization as well as appropriately enforce the above-described processes, OCC maintains authority to initiate a rule enforcement action against a Clearing Member that attempts to participate in ETH sessions without first obtaining the necessary approval. As described above, Clearing Members not approved for ETH sessions who trade during ETH sessions would have their trades reviewed by OCC staff. Clearing Members who attempted to participate in ETH sessions that did not obtain the necessary approval to do so may be subject to a minor rule violation fine.^[51] In addition, if a Clearing Member's operational or risk contacts for ETH sessions were unavailable had OCC attempted to contact such individuals, the Clearing Member may be subject to a minor rule violation fine. OCC has existing processes in place to monitor for Clearing Member violations of OCC's Rules and such processes would also apply to Clearing Member activity during ETH sessions.

Proposed Changes

OCC proposes amendments to its Rules and its ETH procedures to accommodate any participating Exchange request, including CFE's and Cboe's proposals for extended trading hours in VX Futures Options and multi-listed equity options, to establish a legal framework for the consideration of an Exchange's future extension of trading hours for these or other products. Specifically, OCC proposes to amend Rule 402, which is currently reserved, to establish a rule concerning products cleared outside of regular trading hours. In addition, OCC proposes to make changes to its ETH Procedure to amend the definition of “extended trading hours” to encompass not only hours in which U.S. payment systems are closed, as ETH is currently defined therein, but also to incorporate hours in which OCC has determined there may be heightened operational risk or market risk. In addition, OCC proposes to revise its ETH procedures to define the end of the ETH monitoring window as the start of regular trading hours. This revision would clarify to Clearing Members that OCC will conduct uninterrupted monitoring throughout all ETH sessions including the proposed early morning session between 6:30 a.m. and 8:25 a.m. CT.

Proposed Rule 402

Rule 402 would clarify that products executed on an Exchange outside of regular trading hours, as determined by OCC, would be subject to OCC's established procedures for the risk management of cleared contracts during ETH sessions, as is the case for index options and index futures traded in ETH sessions today. Accordingly, the amended Rule would provide OCC's authority to determine whether a product proposed to be traded at a particular time would be subject to OCC's procedures for the management of risk during regular trading hours or those for ETH. For example, OCC has determined that the proposed Exchange extension of trading hours for multi-listed equity options from 3:00 p.m. Central to 3:15 p.m. Central may be considered regular trading hours under OCC's rules. Such extension does not raise the same concerns, or to the same degree, about the availability of U.S. payment systems or Clearing Member staffing to support such trading during such hours that motivated the design of the ETH procedures. This rule also clarifies that it is OCC that determines whether particular hours are considered regular trading hours or extended trading hours for purposes of OCC's ( printed page 53300) own rules and operations. How a particular Exchange classifies such hours under Exchange Rules is not determinative. For example, Cboe initially proposed to consider the afternoon session as a “curb” session,^[52] and then subsequently amended its proposal to consider it an extension Cboe's Regular Trading Hours.^[53] OCC would make its own determination of how to classify an Exchange's proposed hours based on the impact on OCC's operations and risk management.

Proposed Rule 402 would further provide that OCC would determine, at its sole discretion and for the protection of OCC, its Clearing Members and the general public, whether the risk of a product proposed by an Exchange to be traded in extended trading hours may be managed under OCC's existing ETH procedures. As such, Rule 402 documents OCC's authority to evaluate the proposed expansion of ETH sessions and products to determine whether OCC's risk management procedures are adequate to support the expansion. As discussed above, the current ETH procedures were designed with index options and index futures in mind. The procedures may not be sufficient to address the risks associated with the trading of all products at all hours, particularly the risks of overnight trading in equity options.^[54] However, OCC believes that its existing ETH procedures are adequate to address the risks associated with the proposed early morning session. As discussed above, OCC already clears and margins these products during regular trading hours using its existing margin methodology. In addition, the Exchanges' proposed eligibility criteria further limits participation, confining the scope of eligible products to the most liquid names. Beyond this, the early morning session would run from 6:30 a.m. to 8:25 a.m. CT, and any credit risk accumulated during that brief period is subject to OCC's start of business margin authority at 8:30 a.m., when settlement banks are open and OCC can collect additional margin.

Should any other Exchange propose similar hours for similar products, the Rule would also allow OCC to accommodate that Exchange's request. OCC's review and determination of products or hours to be added to ETH sessions, as documented in proposed Rule 402, would also align OCC's Rules with provisions of the Participant Exchange Agreement. Specifically, the Participant Exchange Agreement provides that to the extent OCC agrees to undertake a program or project for a particular Exchange, OCC shall be prepared to undertake comparable programs and projects for each other Exchange that requests it to do so, without discrimination as to schedules, costs, or other terms and conditions. Accordingly, OCC cannot deny a request from a similarly situated Exchange for similarly situated products under the proposed framework. The Participant Exchange Agreement further provides that “each Exchange shall comply with operational specifications for Options including for extended and overnight trading hours specified by OCC and supported by OCC's By-Laws and Rules.” ^[55] Proposed Rule 402 is therefore designed to be consistent with and provide transparency in OCC's Rules regarding OCC's existing ETH Procedures, which the Exchanges agreed to abide by under the Participant Exchange Agreement.

In addition, OCC respectfully suggests that the Commission consider requesting that any Exchange submitting a proposal to extend its trading hours for products cleared by OCC to consult with OCC in advance of such proposal about OCC's anticipated treatment of such hours and any changes that will be necessary to OCC's ETH procedures to support the proposal, and encourage such Exchange provide that information in its filing. Providing such information in Exchange filings would allow the Commission to more wholistically evaluate an Exchange's proposal and its potential impact on clearance and settlement. In addition, should the Commission be concerned with how OCC proposes to classify the trading hours or the suitability of OCC's existing ETH procedures to manage the risks, such concerns could be addressed earlier in the process, thereby promoting efficiency and avoiding unnecessary delay to an Exchange's planned implementation of expanded trading hours.

Finally, proposed Rule 402 would provide that if OCC determines that an Exchange's proposal to allow trading in certain products at certain hours requires changes to OCC's existing ETH procedures, such changes would be made in accordance with (i) OCC's regulatory obligations and (ii) OCC's agreement with the Exchange, including the Participant Exchange Agreement or any agreement with a futures market under Article XII, Section 1 of OCC's By-Laws. Accordingly, Rule 402 would provide transparency that should OCC determine that changes to the ETH procedures are necessary, any such changes must be made consistent with OCC's regulatory obligations, including its obligation to file proposed rule changes with the Commission under Exchange Act Section 19(b) ^[56] and Rule 19b-4 ^[57] thereunder. In addition, for transparency, proposed Rule 402 would also refer to and be consistent with OCC's obligations under its agreements with the Exchanges. For example, the Participant Exchange Agreement requires OCC to use commercially reasonable efforts to maintain sufficient operational capacity to clear new options on behalf of the Exchanges and to expand operations capabilities as expeditiously as possible and as warranted to facilitate an Exchange's ability to clear new options. Accordingly, should OCC determine that changes to the ETH procedures are required to support an expansion, OCC would make commercially reasonable efforts to implement changes to its ETH procedures, including filing any necessary proposed rule changes, as expeditiously as possible.

ETH Procedure

OCC also proposes to formally file the ETH Procedure as a rule.^[58] Although the ETH Procedure has governed OCC's ETH program since its inception, it was not filed as a rule at that time. OCC is now proposing to codify it as a rule to provide Clearing Members transparency on the program's governance and operational requirements.

In addition to formally filing the ETH Procedure as a rule, OCC proposes to make the following changes:

(i) Extended ETH Monitoring Window. OCC proposes to clarify within the ETH Procedure that ETH credit risk monitoring and Clearing Member eligibility validation would occur during the same monitoring window, ( printed page 53301) with both processes continuing until the start of regular trading hours at 8:30 a.m. Under the current procedure, the monitoring window was not expressly defined with reference to the start of regular trading hours. The proposed change would clarify to Clearing Members that both processes would remain active for the full duration of any ETH session.

(ii) Publication of ETH Procedure and Eligible Products List. OCC proposes to publish both the ETH Procedure and a list of ETH eligible products and their associated clearing sessions on OCC's public website. OCC also proposes to establish a new requirement within the ETH Procedure to issue an Information Memorandum whenever the ETH Procedure is amended or products are added to or removed from the eligible list. A new eligibility review is required each time an Exchange proposes to expand the products eligible for ETH clearing or to expand the hours for an existing product beyond what has previously been reviewed and determined. These changes are designed to provide Clearing Members and other market participants with transparency on the scope of OCC's ETH program, and any material changes to the program. In addition, OCC also proposes to remove from the ETH Procedure the header information identifying the procedure owner, rule-filed designation, and version number, as well as the related documents and revision history sections. This information does not constitute a rule and will continue to be maintained in OCC's internal policy governance system of record. Consolidating this information in a single system of record is appropriate and efficient and reduces the risk of inconsistency between the system of record and the Procedure itself.

(iii) Revised Clearing Members ETH Approval Process. OCC proposes to clarify Market Risk's role in reviewing and approving Clearing Member applications for ETH participation. Under the revised procedure new or existing Clearing Members seeking to participate during ETH Sessions must, in addition to meeting baseline requirements, receive approval from an FRM Officer.^[59] Market Risk would assess each Clearing Member eligibility for ETH participation by evaluating that Clearing Member's: (1) financial condition, (2) operational readiness, and (3) risk profile. Market Risk would present a recommendation to the FRM Officer who would approve or deny the Clearing Member's ETH participation. The determination would be documented via email. Given the expanded scope of OCC's ETH eligible products, the ETH approval process would provide OCC with a more disciplined approach to managing the credit and operational risks associated with ETH participation.

(iv) ETH Product Eligibility Integration. OCC proposes to also clarify that the ETH product eligibility determination would be separately incorporated into its New Product review process, to ensure these products would be evaluated according to the established standards defined in the New Product Procedure. Under the revised procedure, when an Exchange proposes a new product or trading session for ETH clearing, OCC will evaluate the proposal through its established new product review framework, taking into account operational, financial risk, regulatory, and trading session designation factors. This change makes explicit a process OCC already follows and ensures that ETH product eligibility is subject to the same documented standards applicable to all new products OCC proposes to clear.

(v) ETH Exceedance Review. OCC proposes to also document within the ETH Procedure the process that OCC uses to review and categorize exceedances identified by its credit risk monitoring process during ETH sessions. Specifically, the revised procedure clarifies that not all monitoring alerts reflect actual ETH trading losses as exceedances may be attributed to non-trading activities. The revised procedure provides that Core Clearing would verify whether an exceedance resulted from ETH trade activity and would document cases where the exceedance is confirmed to result from non-trade activity.

Finally, OCC proposes to make certain additional conforming, clarifying, and non-substantive administrative changes to the ETH Procedure, including grammatical corrections and updated departmental references to reflect current organizational titles and responsibilities.

Proposed Amendment to Rule 307B

OCC proposes to amend Rule 307B to add a fifth use case to paragraph (a) to clarify the protective measures that may be imposed on a Clearing Member. The proposed amendment would codify OCC's existing authority under Rule 307B to authorize the Chief Executive Officer, Chief Operating Officer, or a Designated Officer of the Corporation, such as an FRM Officer, to revoke a Clearing Member's authorization to participate in ETH sessions as such officer deems necessary or appropriate in the circumstances. Such authority to revoke a Clearing Member's ETH authorization may be exercised where material changes to that Clearing Member's financial condition, operational readiness, or risk profile presents risks to OCC that warrant the imposition of protective measures. Prior to the proposed amendment, Rule 307B did not specifically address ETH participation; OCC's authority to restrict a Clearing Member's access to ETH session was derived from Rule 307B(a)(1) pursuant to which OCC may prohibit or impose limitations on the clearance of any transactions that increase credit or liquidity risk.^[60] OCC believes that stating this authority explicitly, rather than relying on current rule 307B(a)(1) is necessary and beneficial because the existing Rule 307B(a)(1) provides general authority to restrict clearing activity, which does not specifically address the revocation of a Clearing Member's ETH participation, which is a distinct operational mechanism. An express rule provision would eliminate any interpretative ambiguity on the scope of OCC's authority for this use case, which would also reduce the risk of potential disputes. Since the proposed amendment adds a new use case to paragraph (a) of Rule 307B, any revocation would continue to be subject to the existing review procedures set forth in Rule 307B(b) and (c). Those procedures afford affected Clearing Members the opportunity to request review by OCC's Risk Committee, to receive advance notice of any hearing, to be heard and to present evidence, and to be represented by counsel.

2. Statutory Basis

For the following reasons, OCC believes that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act,^[61] Rule 17ad-22(e)(1),^[62] Rule 17ad-22(e)(6),^[63] and Rule 17ad-22(e)(13) ^[64] thereunder.

Section 17A(b)(3)(F) of the Act ^[65] requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and, to the extent ( printed page 53302) applicable, derivative agreements, contracts, and transactions, and, to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency. As noted above, markets evolve and expand. To keep up, Exchanges have increasingly sought to offer new products and/or longer trading sessions to market participants. OCC believes the Exchanges' requests to offer additional products during ETH, including options on index futures, single name equity options, and other product types demonstrates market evolution toward increased trading during ETH. The adoption of the procedures-based approach promotes prompt and accurate clearance by enabling OCC to efficiently evaluate an Exchange's expansion of its trading hours against established criteria, thereby allowing markets to respond to demand while maintaining safety standards. This proposed rule change maintains the core risk controls established in 2014 and provides for a scalable operational framework to accommodate trading in ETH sessions that can be risk-managed within OCC's existing procedures. OCC would continue to maintain its current framework for monitoring and risk mitigation in ETH sessions. Moreover, OCC believes that the proposed changes provide additional clarity for the industry by defining ETH sessions as trading periods outside of Exchanges' normal trading hours. In addition, OCC believes the proposed amendment to Rule 307B strengthens its ability to manage risks arising from ETH activity by providing an express mechanism to revoke a Clearing Member's ETH authorization where material changes to that Clearing Member's financial condition, operational readiness, or risk profile warrant the imposition of protective measures.

OCC believes the proposed changes are also consistent with the requirements in Rule 17ad-22(e)(1) under the Act.^[66] Rule 17ad-22(e)(1) requires that each covered clearing agency establish, implement, maintain, and enforce written policies and procedures reasonably designed to provide for a well-founded, clear, transparent, and enforceable legal basis for each aspect of its activities in all relevant jurisdictions.^[67] The changes are designed to modify OCC's Rules to provide additional transparency by stating that the products eligible for trading in ETH sessions will be subject to OCC's established procedures as well as to define ETH sessions and standard trading hours by reference to normal exchange trading hours. The procedures-based approach establishes clear product eligibility criteria in OCC's procedures rather than enumerating each product type in OCC's Rules. This framework would enable market participants to understand eligibility requirements while enabling OCC to authorize new products without resorting to filing separate rule changes for each new product proposed for trading during ETH sessions. Therefore, OCC believes that the proposed changes promote compliance and consistency with the requirements in Rule 17ad-22(e)(1) to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for a well-founded, clear, transparent and enforceable legal basis.

Rule 17ad-22(e)(6) ^[68] requires OCC to, among other things, establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, at a minimum, (i) considers and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market, and (ii) marks participant positions to market and collects margin, including variation margin or equivalent charges if relevant, at least daily and includes the authority and operational capacity to make intraday margin calls in defined circumstances. OCC's ETH margin framework comprises three interlocking layers that, when taken together produce margin commensurate with the risks and particular attributes of each relevant product, portfolio, and market during ETH sessions, and maintain OCC's capacity to mark positions to current market prices and initiate intraday margin calls on an intraday basis. As described above, OCC's margin methodology constitutes the first layer that produces product- and portfolio-commensurate margin for all products cleared by OCC during regular trading hours. No changes to that methodology are required to extend its coverage to ETH sessions. OCC's second layer is its ETH credit risk monitoring, comprising the Portfolio Revaluation and Intraday Margins systems. These systems provide P&L and margin monitoring during ETH sessions, and support OCC's tiered escalation framework and intraday margin call authority. This proposal extends the monitoring and escalation framework to all products authorized for ETH clearing without modification to either system. OCC's third layer is its ETH margin add-on that is charged to any Clearing Member participating in ETH sessions. The add-on was specifically designed to address OCC's inability to collect incremental margin when settlement banks are closed. For the foregoing reasons, OCC believes the proposed rule change is consistent with Rules 17ad-22(e)(6).^[69]

OCC believes the proposed changes are also consistent with the requirements in Rule 17ad-22(e)(13) under the Act.^[70] Rule 17ad-22(e)(13) requires a covered clearing agency to establish, implement, maintain, and enforce written policies and procedures reasonably designed to ensure the covered clearing agency has the authority and operational capacity to contain losses and liquidity demands and continue to meets its obligations, by, at a minimum, requiring the covered clearing agency's participants and, when practicable, other stakeholder to participate in the testing and review of its default procedures, including any close-out procedures, at least annually and following material changes thereto. OCC's established exchange controls and periodic review procedures are specifically tailored to oversee Clearing Member trading activity during the ETH sessions. These procedures ensure that OCC possesses the authority and operational readiness to monitor trades and coordinate Clearing Member approvals with participant exchanges. Such proactive oversight mitigates uncollateralized credit and liquidity exposures, enabling OCC to take timely action to contain losses and manage liquidity demands while fulfilling its obligations, consistent with Rule 17ad-22(e)(13).^[71]

For the above reasons, OCC believes that the proposed rule change is consistent with Section 17A of the Exchange Act ^[72] and the rules and regulations thereunder applicable to OCC.

(B) Clearing Agency's Statement on Burden on Competition

Section 17A(b)(3)(I) of the Act ^[73] requires that the rules of a clearing agency not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. OCC does not believe that the proposed rule change would impose any burden on competition not necessary or ( printed page 53303) appropriate in furtherance of the purposes of the Act. As discussed above, OCC proposes to amend its Rules to accommodate the issuance, clearance and settlement of a broader and expanded range of products in the ETH sessions subject to its existing risk management procedures. As discussed above, determination of product eligibility would be governed by criteria specified in OCC's procedures ensuring consistent application across all participant Exchanges and products. While certain Exchanges may not yet have developed the controls and processes necessary to support ETH trading, and doing so may entail both time and cost, putting those Exchanges that have already done so at a competitive advantage, OCC believes that the Exchange risk controls for ETH trading, working in tandem with OCC's ETH procedures, are necessary and appropriate for properly managing the risks associated with the clearance and settlement during ETH sessions consistent with the requirements of the Exchange Act and OCC's regulatory obligations thereunder, including OCC's obligations discussed above to (i) maintain a risk-based margin system commensurate with the risks of each relevant product, portfolio and market; ^[74] and (ii) ensure it has the authority and operational capacity to take timely action during ETH sessions to continue to meet its obligations.^[75]

In addition, OCC does not believe that the proposed extension of the ETH procedures to the early morning sessions, including qualification criteria for ETH trading and the payment of the ETH margin add-on charge described above, imposes a burden on competition amongst OCC's Clearing Members that is not necessary or appropriate in furtherance of the Exchange Act. The qualification criteria and the charge would be applied uniformly across all Clearing Members participating in ETH sessions. OCC believes that the ETH margin add-on remains necessary and appropriate to ensure that OCC covers its credit exposure to its participants that produces margin levels commensurate with the risks and particular attributes of the options markets in such ETH sessions, consistent with Rule 17ad-22(e)(6)(i) under the Exchange Act.^[76] OCC plans to, on an annual basis, bring the ETH margin add-on to the Financial Risk Advisory Committee (“FRAC”) and the FRAC Risk Committee for discussion in light of changes in the market.

For these reasons, OCC believes the proposed rule change would not impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others

Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:

(A) by order approve or disapprove such proposed rule change, or

(B) institute proceedings to determine whether the proposed rule change should be disapproved.

The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form (www.sec.gov/​rules/​sro.shtml); or
• Send an email torule-comments@sec.gov. Please include file number SR-OCC-2026-008 on the subject line.

Paper Comments

• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-OCC-2026-008. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( www.sec.gov/​rules/​sro.shtml). Copies of such filing will be available for inspection and copying at the principal office of OCC and on OCC's website at www.theocc.com/​Company-Information/​Documents-and-Archives/​By-Laws-and-Rules.

Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection.

All submissions should refer to File Number SR-OCC-2026-008 and should be submitted on or before September 8, 2026.